To STP LMT a Breakout or Not?

R

rc5781

Just wondering if any of you play breakouts on the ES consistently.

I'm wondering how to assess whether a break of a certain level is a true break or likely to fail. And this assessment would occur BEFORE the actual breakout.

For example, a stp lmt buy at 1200.50 at 9:40am was money in the bank today. How would one know that before the actual break?

I've been using a stp loss of 3pts from the stp lmt.
 
Quote from rc5781:


For example, a stp lmt buy at 1200.50 at 9:40am was money in the bank today. How would one know that before the actual break?
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First, 9:40 was more of a break DOWN than a break out. Trading is always easy looking at charts in hindsight. (Just ask anyone who has written a book on trading.)

Your question is the same as asking "How will I know when the market will rally ahead of time."

That you will never know. The best you can do is place your bets based on a study of similar past events and the statistical probabilities.

For example, if you were to look at 6 months of 1 min data on the ES, and found that between 9:30AM and 11:00AM, every time price broke above the highest close of the last 20 bars, you were likely 62% of the time to make a profit of 3 points with a stop and target of 3 points, then you might want to take the trade.

But without that or similar knowledge, you're just taking a crap shoot. Which isn't a good career move if you're planning on staying in the trading game for long.

IMHO, that's particularly true of a day like today when the ES is acting like it's on crack, being pushed up down and sideways by every comment from some lame congressman coming out of Washington. Not a good environment for trying to outguess the market.
 
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